Help Evaluating a small multifamily

[Mike Terry]

Hi BPers,

I am trying to valuate a small multifamily property. 

This is a B class property. It is in good condition, but has a lot of deferred maintenance. The property is in the Michigan in a midsized urban market. It's a 5 unit. The rents are $5400 a month. Some of utilities are paid by tenants. some units have electric metered and tenants pay entire amount. The taxes are pretty high at 7400$ a year. Roof, HVAC, boilers, water heaters are all 20 plus years old. It is a remarkably well maintained property. I estimated capex at 10% which I think is low considering the deferred maintenance, 10% property management, 8 percent vacancy. Metering all utilities would make the property NOI better. How much should I estimate this will cost?

This is a Mom and Pop ownership where husband has passed away. It is screaming for owner finance offer. The owner's family currently occupies two units, so the rents are their estimates. The property has a 3 car garage that could be rented to tenants to increase ROI. There is shared laundry, not charged to tenants. There are two 6x6 storage units that are rented for 25$ a month each (that needs to increase). There is also a RV garage. Hard to value that.

I like the property for a lot of reasons. IT can definitely be improved from an ROI standpoint with metered and reassigning all utilities, charging for laundry, renting garages to tenants, renting storage space.

I own a portfolio of duplexes and single family properties that are doing well.  I bought a 16 unit apartment complex that was a expense nightmare, with low rents, that I eventually gave up trying to make profitable.  to give you some idea of my experience.

Any ideas on this one I would love to hear.  What would your do to figure a proforma that supports and offer for a profitable property?

The property has been on the market for over 180 days.  They originally listed at 500k.  It's now listed at $399k.  Here is the listing history: